Digby Jones backtracks on non-dom tax 'threat'

Lord Jones said a £30,000 tax on "nondoms" threatened London's status as the world's leading financial centre and made it harder for him to sell Britain as a place for investment.

But within hours the Department for Business and Regulatory Reform issued a statement of "clarification" in which he backed the "reasonable" plans and made clear the "UK remains an excellent place to invest".

He also drew a frosty response from Chancellor Alistair Darling, who proposed the levy. The Treasury hopes to raise £650million by charging nondoms who have lived here for more than seven years an annual £30,000 to keep foreign income free of UK tax.

Lord Jones blundered when he said: "I can give five reasons as to why you should invest in Britain before you go and invest anywhere else in Europe. But maybe there were seven and now there are five. It has caused people to say 'does this mean you don't want us?'"

He also said there was a danger the UK would lose its "badge as the place to come and bring your skill".

The former director general of the CBI is the latest "Goat" - an outsider brought in by Gordon Brown to serve in his Government of All the Talents - to have embarrassed the Prime Minister.

Security minister Lord West had to climb down over the detention of terror suspects, while Lord Malloch-Brown, a Foreign Office minister, caused